Skip to content
Calcapedia
Menu
Money

Home Equity Calculator

Find your home equity, your loan-to-value and how much you could borrow against your home, then the payment on a fixed loan or a line of credit.

Level: Grades 11–12

  • Common Core standard HSA.SSE.B.4Derive the formula for the sum of a finite geometric series (when the common ratio is not 1), and use the formula to solve problems.
Printable worksheet

Home Equity Calculator

Know the answer you need? Pick an input to work backward.

Inputs

Include every loan secured by the home.

The lender's cap on all loans as a share of the value. 80–90% is common.

Type of borrowing

Result

Maximum you could borrow

$132,500.00

You could borrow up to $132,500.00. A $50,000.00 home equity loan at 8.25% for 180 months costs $485.07 a month.

Home equity
$200,000.00
Current loan-to-value
55.56%
Combined loan-to-value after borrowing
66.67%
Monthly payment
$485.07
Total interest
$37,312.63
Total of payments
$87,312.63
What you repay
  • Amount borrowed$50,000.0057.3%
  • Interest$37,312.6342.7%

See the step-by-step solution ↓

Step-by-step solution

  1. Equity: the home's value minus what you owe on it

    $450,000.00−$250,000.00=$200,000.00

  2. Current loan-to-value: what you owe as a share of the value

    $250,000.00$450,000.00=55.56%

  3. The lender caps all loans on the home at 85% of its value. Subtract what you already owe to see how much room is left

    $450,000.00×85%−$250,000.00=$132,500.00

  4. Check the combined loan-to-value after borrowing: everything you'd owe as a share of the value

    $250,000.00+$50,000.00$450,000.00=66.67%

  5. Find the monthly payment. A standard formula gives the one amount that pays off $50,000.00 in 180 equal months, at the monthly rate i (the yearly rate ÷ 12)

    $50,000.00×0.0068751−(1+0.006875)−180=$485.07

  6. Total interest: all the payments minus the amount borrowed

    $485.07×180−$50,000.00=$37,312.63

Test yourself

20 quick questions built from this calculator's formula: work out results, predict what happens when an input changes, and work backward from an answer. Every answer comes with the working.

Please note: Results are estimates for planning and comparison. Lenders, banks, and tax authorities may round differently or include fees not modeled here, so confirm figures with your provider before deciding.

What this calculator does

Find out how much of your home you really own, and how much a lender might let you borrow against it. Enter the home's value and what you owe. The calculator shows your equity (the part you own outright) and your loan-to-value ratio (what you owe as a share of the value). It also shows your borrowing limit under a lender's cap. Then it works out the monthly payment on the amount you want. You can see it as a fixed-rate home equity loan or as a home equity line of credit (HELOC).

Lenders rarely let you borrow all of your equity. They cap the total of every loan backed by the home, old and new, at a share of its value. That's commonly somewhere between 80% and 90%. This cap is called the combined loan-to-value, or CLTV. It's what turns equity into a borrowing limit. It's also why two owners with the same equity can be offered different amounts.

Where it's used

Why this math matters outside the classroom:

  • Renovation budgets. Owners of a $450,000 home owing $250,000 find that an 85% cap leaves room to borrow up to $132,500 for a remodel.
  • Choosing loan or line. Borrowers compare a fixed $485 a month for 15 years with a line costing $344 a month at first and $426 later.
  • Lender underwriting. Loan officers divide total secured debt by the appraised value to check that a new line keeps the combined ratio under the cap.
  • Tracking equity. Homeowners subtract their payoff balance from an estimated value each year to watch their equity grow.
  • Classroom finance. Students compare the total interest on an interest-only period followed by repayment with a loan that amortizes from day one.

Grade level and standards: Grades 11–12; Common Core State Standards for Mathematics HSA.SSE.B.4. © Copyright 2010. National Governors Association Center for Best Practices and Council of Chief State School Officers. All rights reserved.

How to use it

  1. Enter the home's current value and the total you still owe on every loan backed by it.
  2. Enter the lender's maximum combined loan-to-value and the amount you'd like to borrow.
  3. Choose a fixed home equity loan or a line of credit. Then enter the rate and the term, or for a line, the draw and repayment periods.
  4. Read the borrowing limit. Then read the monthly payment and total interest for the amount you entered.

What the inputs mean

Current home value
An estimate is fine for planning. The lender will order an appraisal (a professional valuation), and the limit is based on that figure.
Mortgage balance owed
Your first mortgage, plus any other loan already backed by the home. Use what it would take to pay each one off today, not the original loan amount.
Maximum combined loan-to-value
The lender's cap on (everything owed + the new borrowing) ÷ the home's value. Ask the lender. It varies by lender, credit score and type of property.
Amount you want to borrow
For a line of credit, the calculator assumes you take out this full amount at the start. That gives the largest payments the line could need at this rate.
Interest rate
Home equity loans usually have fixed rates. HELOC rates usually change over time, so treat the line's figures as an estimate at today's rate.
Draw period (interest only)
The draw period is when you can take money from the line. Many lines require only interest during it. Enter 0 if your line requires paying down the balance from the start.

Formula and method

equity = home value − amount owed
loan-to-value = amount owed ÷ home value × 100
borrowing limit = home value × max CLTV ÷ 100 − amount owed
CLTV after borrowing = (amount owed + new amount) ÷ home value × 100
i = rate ÷ 100 ÷ 12
fixed loan payment = A × i ÷ (1 − (1 + i)^(−n))
HELOC draw payment = A × i;  repayment payment = A × i ÷ (1 − (1 + i)^(−n_repay))

In the payment lines, A is the amount you borrow and i is the monthly interest rate. n is the number of monthly payments on a fixed loan, and n_repay is the number of monthly payments in a line's repayment period.

Equity and loan-to-value describe where you stand now. The borrowing limit applies the lender's cap to the home's value. Then it subtracts what's already borrowed, because the cap covers every loan on the home together.

A home equity loan is repaid like any installment loan. You pay the same amount every month, and that clears the balance by the end of the term. A line of credit usually has two phases. While you can draw on it, the minimum payment is often just the month's interest, so the balance doesn't fall. When the draw period ends, the rest of the balance is spread over the repayment period, and the payment jumps.

Worked example

A home worth $450,000 has $250,000 owed on it. The lender allows an 85% combined loan-to-value, and you want to borrow $50,000 at 8.25%.

  1. Equity: $450,000 − $250,000 = $200,000. The current loan-to-value is $250,000 ÷ $450,000 ≈ 55.56%.
  2. Borrowing limit: 85% × $450,000 − $250,000 = $382,500 − $250,000 = $132,500.
  3. After borrowing $50,000, the combined loan-to-value is $300,000 ÷ $450,000 ≈ 66.67%.
  4. As a 15-year fixed loan: $50,000 × 0.006875 ÷ (1 − 1.006875^(−180)) ≈ $485.07 a month, with $37,312.63 of interest.
  5. As a line with a 10-year interest-only draw: $50,000 × 8.25% ÷ 12 = $343.75 a month. Then it's $426.03 a month for 20 years, with $93,497.88 of interest in all.

Result: You could borrow up to $132,500. A $50,000 fixed loan costs about $485.07 a month for 15 years. The same amount on a line costs less at first but far more in total, because the balance doesn't shrink during the draw period.

Understanding the result

The borrowing limit is a ceiling, not a recommendation. Borrowing less keeps the combined loan-to-value lower. That leaves a cushion if home prices fall, and it may qualify you for a better rate.

If you know the amount and want predictable payments, a fixed loan is simpler. A line suits costs that come over time, such as a renovation paid in stages. That's because you only pay interest on what you've taken out.

For a line, compare the draw-period payment with the repayment payment. The step up when repayment begins is the number people most often miss when budgeting.

Assumptions and limitations

  • The rate stays fixed for the life of the loan or line. Interest is the yearly rate ÷ 12 on the balance, with payments at the end of each month.
  • For a line, the full amount is taken out at the start, and only interest is paid during the draw period.
  • The amount owed covers every loan backed by the home, and the value is one the lender would accept.
  • Closing costs, yearly fees and points (upfront fees for a lower rate) aren't included.
  • It doesn't model changing HELOC rates, rate caps, or minimum-payment rules that include principal (paying down the balance).
  • Lenders also look at your income, your debt-to-income ratio and your credit. So you may not be offered the full equity-based limit.
  • This is an estimate. The lender's official disclosure is the figure to rely on.

Frequently asked questions

How much equity do I need to borrow against my home?

Enough that what you owe stays under the lender's cap after the new loan. With an 85% cap, a home worth $450,000 can carry up to $382,500 of total debt. So an owner who owes $250,000 could borrow up to $132,500. One who owes $382,500 or more couldn't borrow anything.

What is the difference between LTV and CLTV?

Loan-to-value (LTV) usually describes one loan against the home's value. Combined loan-to-value (CLTV) adds up every loan backed by the home. That's the figure that matters when you add a second loan or line on top of a mortgage.

Why is the HELOC payment lower at first?

During the draw period, you often pay only the interest, so none of the payment lowers the balance. When repayment begins, the whole balance must be paid off over the remaining years, so the payment rises. With the default numbers, it goes from $343.75 to $426.03 a month.

Is a home equity loan cheaper than a personal loan?

Often, because the home backs it, which usually means a lower rate. The trade-off is that your home is at risk if you can't pay, and there may be closing costs. Compare the rates you're actually offered for the same amount and term.

How this calculator is checked

Method: Equity and loan-to-value by definition; borrowing limit as value × CLTV cap − balances; standard level-payment formula with monthly rate = yearly rate ÷ 12; interest-only draw period for lines of credit. The calculation is covered by automated tests with known reference values and edge cases. Last updated 2026-10-18. Found a problem? Tell us.

Embed this calculator

Put this Home Equity Calculator on your own website or blog for free. Paste this code where you want it to appear: